M-Commerce Takes Off in China
By Casey Hall
SHANGHAI — In the world’s largest digital marketplace, it’s no real surprise that consumers have embraced mobile commerce. What has come as a surprise to China-watchers has been the pace of adoption, with 2014 seeing a year-on-year increase of 91 percent for m-commerce sales in China, according to Web agency Go-Globe, with $51.62 billion of China’s half trillion-dollar online shopping industry being spent on mobile last year.
Data from Internet market research firm iResearch show that one-third of online purchases in China were made with a mobile device in 2014. The growth is coming now because of a confluence of factors.
“In China, mobile infrastructure is very good, people can use mobile everywhere. This is especially important in lower-tier cities. For a lot of people, a smartphone is their only device [for getting online] they use to purchase,” explained Will Tao, iResearch’s senior research manager. “Also, China’s e-commerce generally has evolved very quickly, China is the most developed online shopping market in the world, so it’s not a surprise they would also be very quick to [embrace] m-commerce.”
It’s a trend that has been eagerly embraced by China’s biggest e-commerce platforms, who have rushed to partner with mobile based social networks and encourage use of sophisticated new shopping apps among their consumers.
Alibaba’s Taobao and Tmall sites accounted for 76.1 percent of e-commerce spending from mobile devices in China last year, with particularly impressive results coming during November’s Singles’ Day sales event, when 42 percent of the $9.3 billion of sales during that day were completed using a mobile phone — just one year earlier, 90 percent of Singles’ Day sales on Alibaba platforms came from PCs.
In March, Taobao.com launched Xiaopu — “small booth” in Chinese — a feature in the Taobao app that enables merchants to upload product listings more quickly through mobile devices and connect directly with consumers through social media.
Since its launch, more than 2 million Taobao merchants have begun to use Xiaopu.
“Xiaopu simplifies the steps to manage a store and could reduce the time to upload a product listing from 20 minutes to three minutes. For example, merchants can scan a bar code on a product to post a product,” said Zhang Kuo, director of Alibaba’s mobile business. “Xiaopu also allows merchants to post messages on Chinese social network Weibo to reach followers based on their location. Consumers could buy products that are close to them, and even get the product from a merchant in person.”
Also leveraging a partnership with one of China’s top social media networks to boost its mobile business is JD.com, which last year accepted a $210 million investment from Chinese mobile giant Tencent in exchange for a 15 percent stake.
Tencent’s WeChat platform currently boasts 549 million monthly active users, many of whom are enthusiastically embracing the mobile social network’s potential as an m-commerce platform. “Mobile isn’t the future of e-commerce — it’s driving our growth today,” said Josh Gartner, a spokesman for JD.com. “WeChat and Mobile QQ [another Tencent platform] are social apps more central to Chinese people’s daily lives than any social network in the U.S. The payment systems and share functions are all baked in, so they are proving to be a tremendous competitive tool that no one in Chinese e-commerce can come close to matching.”
According to Patrice Nordey, founder and chief executive officer of digital consulting agency Velvet Group, Western brands need to familiarize themselves with China’s unique mobile infrastructure in order to cash in on the m-commerce boom, particularly as the major social media players ally themselves with major e-commerce players, making a one-size-fits-all m-commerce strategy an impossibility.
“Obviously this is something brands need to consider, to make everything available and compliant on mobile, and WeChat compliant as well,” he said. “You can have your e-commerce Web site enabled on mobile, but many people will come to m-commerce via WeChat, so if you use [Alibaba’s payment platform] Alipay, for example, it won’t be able to be used on WeChat, which is owned by rival Tencent. These are all things you need to take into account.”
At present, it’s still smaller purchases, often on impulse, that are dominating m-commerce spending, with categories such as cosmetics and clothing proving particularly popular, though in certain circumstances, luxury goods are definitely being snapped up by Chinese consumers using mobile phones.
According to Tao and iResearch, the biggest winners thus far from the growth of m-commerce have been flash sales sites, many of which are seeing more than half of their sales coming through mobile.
Thibault Villet, cofounder and ceo of flash sales site Mei.com, said the fact that their sales start at 9 a.m. each day means they catch a lot of consumers on their daily commute to the office, at a loose end while riding the metro or bus to work and ready to utilize that time to grab a bargain on their smartphones.
“We do now over 60 percent of our business on mobile. This has really surprised me over the past 24 months, the speed of this change. Yesterday we had 68 percent of our sales on mobile,” Villet said. “If we look at our average basket on mobile, it’s slightly higher than PC for a very simple reason: Most of the customers who are buying on mobile are our regular and VIP customers, and they have a lot of confidence in purchasing the products. It has transformed our business.”